The $2.6bn in fines levied against HSBC and Standard Chartered indicates that what used to be regarded as these banks’ biggest virtues – their exposure to emerging markets and new growth economies – are also weaknesses.
Foreign banks have been having a tough time at the hands of US bank regulators recently, and these fines have a hint of protectionism. There is clearly a feeling that foreign banks have destabilised the US financial system and systematically breached laws.
One indication of the mood in Washington is a proposal by Daniel Tarullo, a senior Federal Reserve regulatory official, to top up capital requirements on foreign banks to ensure they are in line with domestic banks. Read more
The news that Temasek, the Singapore investment fund, may dispose of its £6bn stake in Standard Chartered, has reignited talk of the British bank finally losing its independence. I will believe it when I see it.
No doubt Standard Chartered will cease to exist as an independent bank one day, but I have heard speculation about it for 20 years, and it never quite seems to happen. It is like talk of the dollar losing its status as a reserve currency. Read more
The sense of shock in London about the allegations levelled against Standard Chartered goes well beyond the stock market where – as of mid-morning on Tuesday – the shares were down by nearly a quarter.
The group is virtually the only large UK bank not to have suffered serious reputational damage over the past five years. That’s partly because its operations are mostly outside the UK and other developed markets, partly, the bank would say, because of its strong culture.
As a result of that unique position – and the high reputation of its senior management — it was the safe harbour of choice for government ministers and their advisers in autumn 2008, when the rest of the UK banking sector was on the brink of collapse. The recapitalisation and rescue plan for the industry, later copied elsewhere, was cooked up in its boardroom, with the help of its top executives, generating a mass of laudatory coverage. Read more